VERO BEACH — Indian River Medical Center leaders are to vote Oct. 3 on the Cleveland Clinic takeover of the county-owned hospital.

Details, including how Cleveland Clinic plans to invest in $250 million in the hospital in the next 10 years, will be disclosed Tuesday.

Indian River County Hospital District trustees, who own the hospital, and IRMC directors, who lease and operate the facilities, are to vote on the deal at separate meetings Oct. 3.

When the transaction closes, which is expected in December, Cleveland Clinic will gain control of an institution that touches the health care and/or finances of virtually every Indian River County resident.

The goal of the deal, said Hospital District Chairwoman Marybeth Cunningham, is to ensure “we have fabulous health care in this community, with a thriving hospital that is financially secure, with the latest technologies and a patient-first focus.”

But some longtime Cleveland Clinic observers in Northeast Ohio warned the top notch health care comes with high costs.

Profits, higher costs?

"Their motivation is going to be profitability," said Dr. Terence Kilroy, former ICU director at Lakewood Hospital, a public hospital in suburban Cleveland the Clinic took over in 1996 and closed in 2016.

Indian River Medical Center chiefs decided in June 2017 to join a larger health system after an industry consultant advised them they need to invest $235 million in new facilities and technology and reverse their declining market share to remain viable.

Cleveland Clinic can be expected to upgrade patient care at IRMC by investing in technology and facilities and instituting efficient treatment processes, said several college professors and medical professionals in Northeast Ohio who follow the Clinic.

Yet the takeover also could result in higher patient costs at IRMC and the transfer of high-end services to the Clinic's Florida headquarters in Weston, Kilroy and other Clinic observers predicted.

Three hospitals owned by Martin Health System, which also is in merger talks with Cleveland Clinic, likely are part of the Clinic's overall strategy in southeast Florida, some Clinic observers said. Overlapping services eventually would be consolidated to save money.

Once in control, Cleveland Clinic is certain to impose its uniform culture on IRMC, several Clinic observers said. That starts with ratcheting up profitability by increasing prices for services, negotiating better reimbursement rates from insurance companies and improving efficiency throughout the hospital.

The Lerner Research Center at the Cleveland Clinic is shown May 9, 2006, in Cleveland. Indian River Medical Center officials on Jan. 30, 2018, voted to begin negotiations with Cleveland Clinic to take over the Indian River County hospital.(Photo: TONY DEJAK, ASSOCIATED PRESS)

"Cleveland Clinic has a very specific model of how they want things done, and the bottom line is the bottom line," said Jim Russell, a research fellow at Cleveland State University's Levin College of Urban Affairs.

"Cleveland Clinic is playing in a completely different league and looking at 'What are the most profitable things we can engage in?'" Russell said. "They're trying to provide care of high value as cheaply as they can.

"When I see the geographic expansion, I don't see value care to the average person," Russell said. "I see highly profitable care for the people who can afford it. It's not going to bring efficiency to indigent care, which is notoriously difficult to manage in terms of costs."

Poor unwelcome?

Residents of the relatively poor neighborhoods surrounding Cleveland Clinic's home campus don't feel welcome there, Russell said. He advised IRMC leaders to make sure the deal is ironclad when it comes to providing care to indigent patients.

Kilroy, too, said Cleveland Clinic is likely to increase prices and minimize care for poor patients.

"They said they didn't want to be responsible for the indigent and they didn't want to be responsible for the Medicaid thing," Kilroy said. "That's how they operate. If you're well-off or middle class and well-insured, you'll probably do fine. If you’re indigent or under-insured, you're going to have to find another place to go."

Cleveland Clinic charged 10 times as much as his private practice for the same procedures and dramatically marked up drug prices, Kilroy said. And the Clinic places less emphasis on doctor-patient relationships, he said.

"The Clinic is basically an industrial model," Kilroy said. "Their thing is about attaching the patient to the institution, not to the individual physician."

If Cleveland Clinic signs Martin Health System, it is likely to centralize many of its Treasure Coast hospital operations at relatively new Tradition Medical Center, Kilroy said. Tradition hospital, he predicted, would be fed patients by a network of smaller hospitals, physician practices and urgent-care and outpatient centers.

Is bigger better?

"The Clinic doesn’t believe in small hospitals; they only believe in big hospitals," Kilroy said. "The biggest problem is going to be the county is going to lose any control and the Clinic is going to do whatever ... it wants."

The Hospital District budgeted $6.4 million in 2017-2018 to reimburse IRMC for indigent patient care, district records show.

Cunningham declined to disclose until Tuesday how much Cleveland Clinic agreed to provide for indigent-patient care.

But Hospital District Trustee Michael Weiss said he believes Cleveland Clinic should pick up the entire tab.

Dr. Wael Barsoum, CEO of Cleveland Clinic Florida, visits Indian River Medical Center in December 2017.(Photo: GEORGE ANDREASSI/TCPALM)

Cleveland Clinic spokeswoman Eileen Sheil declined to answer specific questions about the deal with Indian River Medical Center or the concerns expressed by Kilroy and Russell.

Cleveland Clinic will work with IRMC and the Hospital District " to strengthen and improve access to high-quality and affordable health-care services," Sheil said. "Cleveland Clinic has a longstanding history of providing outstanding care to patients and is fully committed to the communities it serves."

Martin Health spokesman Scott Samples said merger negotiations are ongoing and there is no concrete timetable for a decision.

The Treasure Coast is a the perfect target for a new Cleveland Clinic beach head in Florida because of the affluence of its waterfront communities, said J.B. Silvers, a health care finance professor at Case Western Reserve University in Cleveland.

"They usually commit a fairly significant amount of the money to the community to rebuild the things that are essential," Silvers said. "I think if you’re going to plop down a lot of money, do it in a place where people have the money to pay for it. They clearly aren’t taking inner-city Miami and going after that."

Martin Health System recently built the Tradition Medical Center in Port St. Lucie.(Photo: GEORGE ANDREASSI/TCPALM)

Cleveland Clinic had $9.3 billion in net assets as of Dec. 31, corporate finance records show. The Clinic had operating revenues of $8.4 billion in the fiscal year ending Sept. 30.

The financial fire power and the reputation for high-quality care were the two main factors IRMC chiefs mentioned on Jan. 30 when explaining why they chose Cleveland Clinic over several other health systems that made offers.

"I think it's pretty hard not to accept the No. 2 quality hospital system in the world that is committing to invest several hundred million dollars in our community and our hospital and will bring great health care to us," Cunningham said.

IRMC background

IRMC is the county’s third-largest employer, providing 1,700 jobs that paid $159 million in wages and benefits in 2017, hospital records showed. The hospital spent $52.5 million on supplies and $22.4 million on professional fees.

In addition to paying for indigent care, the taxpayer-funded Hospital District budgeted $1.3 million in 2018 to pay IRMC for for prenatal care.

The hospital also provides less-expensive care than does nearby competitors.

1 p.m. Tuesday: Joint meeting of Indian River County Hospital District trustees and Indian River Medical Center directors to unveil agreements for Cleveland Clinic to take over the hospital, Richardson Center, Indian River State College, 6155 College Lane, Vero Beach.